Apple and Cisco show investors the money

"Our yield used to be this small. But not anymore!" Cisco CEO John Chambers delighted investors with a 75% dividend hike.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.

Who needs to own a boring U.S. Treasury bond when you can buy an exciting tech stock and get a similar -- or in many cases, higher -- yield in the process?

Cisco Systems (CSCO) announced Wednesday that it is raising its dividend by 75%. The move is a response to calls from shareholders who wanted the company to put more of its nearly $50 billion in cash (or "caysh" if you talk like Cisco CEO John Chambers) to productive use. Once that dividend hike takes effect, the yield on Cisco's stock will be more than 3%. By comparison, the 10-year Treasury yields just 1.8%.

And while Apple's (AAPL) newly issued dividend yields 1.7% -- slightly less than the 10-year Treasury bond-- Apple should be in a position to keep increasing that dividend for many years to come, thanks to its more than $110 billion in cash on hand.

At this point, many of these blue chip tech stocks offer the best of all worlds to investors: growth, income and value. With many consumers worried about the health of the economy, a top tech seems like a much safer bet than U.S. Treasury bonds.

Wouldn't you rather own a company like Apple, which continues to generate solid sales and profits from just about iEverything, or Microsoft, which seems poised to hit it big with the upcoming Windows 8 launch, than the debt of a country that's faced with soaring budget deficits and a looming fiscal cliff?

What's more, none of the top techs trade at nosebleed valuations. They are all considerably cheaper than Facebook (FB), which is still valued at 40 times 2012 earnings forecasts, even though the company's stock price has been cut in half since its IPO.

Sure, some tech stocks have high dividend yields simply because their stock price has plunged, thanks to concerns about their long-term health. Remember that the yield is calculated by dividing the dividend by the stock price. Hewlett-Packard (HPQ) has an impressive-looking yield of 2.7%, but the stock is down 25% this year following a nearly 40% drop in 2011.

As HP struggles to find its way in the new mobile world, the company's dividend may not be as secure as Apple's or Microsoft's. And even if HP doesn't wind up cutting its dividend, you still shouldn't be buying a stock just because it issues quarterly checks.

After all, many investors prefer to take the dividends and automatically reinvest in stock of the parent company. So a dividend from a tech stock should be an added bonus from a healthy company, not a consolation prize to soften the blow of a sinking share price.

Fortunately, HP is the exception, not the rule. Just about every top tech with a pristine balance sheet is now paying a dividend, and the shares of all those companies are up this year.

Come on, Larry, Sergey and Eric. What are you waiting for? Don't be evil. Start using some of that more than $48 billion in cash on a dividend. You don't need it all for acquisitions and research and development. A dividend doesn't have to mean you're throwing in the towel on innovation.

Tech companies are no longer being penalized for paying a dividend. In fact, investors seem to be rewarding tech companies for doing the mature thing of returning cash to shareholders instead of wasting it on silly deals of little strategic value. (Can you say Cisco and Flip Video?)

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.